The new wave digitalization is surging forward. Baturu, as a digital infrastructure platform, provides digital transformation services to aftermarket enterprises through "SaaS + supply chain". In 2022, the Baturu platform achieved full-year profitability, pioneering a brand-new business innovation model for the industrial internet in the aftermarket.

On February 16, Baturu Chairman and Founder Zeng Wan Gui was invited to attend the Frankfurt (Shenzhen) Automotive Aftermarket Summit Forum and delivered a keynote speech titled "Digitalization: The Most Certain Opportunity in the Aftermarket". The following is an excerpt from the speech.

Industrial Internet Era

The Underlying Logic of the Aftermarket Has Changed

Around 2000, China's consumer internet emerged and developed rapidly like a prairie fire. One key reason why consumer internet gained momentum so quickly is that it primarily targets the C-end, with relatively low cognitive and participation barriers, making it easier for capital, technology, and other factors to intervene, and more susceptible to standardization and reconstruction.

Due to significant external influences, some enterprises that quickly gained capital support and captured traffic dividends became "kings" in the market, dominating the internet era with sustained advantages. For a long time, many consumer internet companies still followed traditional business competition rules—survival of the fittest, seizing resources from a self-interested perspective.

With the maturity of mobile internet, the ceiling of consumer internet gradually lowered. In the second half of the internet era, its concepts and technologies were applied to traditional industries.

Scenarios in traditional industries are quite similar. Industries such as automotive aftermarket, MRO, and building materials all exhibit characteristics of large scale, dispersion, and low circulation efficiency. They have high cognitive barriers for both buyers and sellers, coupled with long circulation chains and heavy service attributes, making them difficult to standardize and reconstruct.

In the aftermarket, whether it's supply chain, chain stores, used cars, etc., there is currently no enterprise with high market share. In the same time frame, development is much harder and slower compared to consumer internet companies.

Based on the upgrade from consumer internet, industrial internet shares similarities but also has significant differences. When its concepts and technologies enter traditional industries, all logic changes.

From Baturu's establishment in 2013 to nearly ten years now, especially the practical transformations during the three years of the pandemic, we have clearly realized that the development of traditional industries is not a scenario of one dominating all or winner-takes-all. Every industry player in this field has its own value, with upstream and downstream forming a symbiotic and win-win relationship, an interest community, and a complete ecosystem.

The ecological pattern of traditional industries is not easy to change and requires full cooperation from every player in the industry chain.

Grasping Certainty in Uncertainty: Digitalization and Private Domain

Returning to a more recent time frame.

In recent years, affected by the pandemic, the industry and enterprises have faced many uncertainties, including Baturu constantly seeking internal certainties to counter external uncertainties—this is an inevitable trend. Focusing on operations and growth in the existing market, innovating in rule-based and controllable areas, is the key focus for enterprises to think about and plan now.

In the past two to three years, many offline brands have accelerated digital transformation and private domain layouts through various means, turning crisis into opportunity, and accelerating the operation of private domain traffic, shifting from the high-cost "traffic" mindset to a more economical and efficient "retention" mindset.

For example, Anta and Luckin Coffee began laying out private domain businesses from 2020, integrating their own mini-programs, e-commerce, stores, and other online-offline traffic channels. Through full-process digital operations from lead generation, retention, activation, repurchase, to referrals, they created growth miracles: Anta's revenue grew 38.9% year-over-year in 2021, and Luckin's grew 97.5%.

Drawing from relatively mature cases in other fields, for parts operation enterprises, besides offline channels and online platforms, there is a significant certainty: using the internet to do one's own business well—private domain traffic operations.

"SaaS + Supply Chain" Upgrade

Newly Launched Integrated SaaS Service Platform

Baturu has gone through three main development stages since its establishment:

First stage: Self-operated full vehicle parts supply chain platform. From 2013 to 2019, centered around "auto parts shops", Baturu built a closed-loop system from online transactions to offline fulfillment, delivery, and services, providing comprehensive, accurate, fast, and cost-effective full vehicle parts supply chain services to upstream and downstream industries, thereby accumulating a massive parts database, systems, and supply chain capabilities.

Second stage: Strongly controlled matching + self-operated trading platform. In 2020, the partner model was upgraded to a franchise model, providing franchisees with full vehicle parts supply chain + systems + operational empowerment, fully unleashing their flexibility and autonomy as service providers, while Baturu maintained strict control over fulfillment and delivery;

Additionally, it began piloting the "SaaS +" model for end customers, not only providing high-quality supply chains but also SaaS services to assist their internal operations and management. In this stage, Baturu accumulated strong system capabilities and rich operational capabilities through platform services.

Third stage: Open digital infrastructure platform. Based on reflections, explorations, and practices from the first two stages, in 2021, Baturu made a brand-new strategic upgrade, opening up the platform capabilities honed over the past 9 years to the entire industry, providing industry players with overall solutions based on "data + systems + supply chain + operational capabilities" to help each enterprise strengthen and grow its own business.

To this end, Baturu modularized and deconstructed its accumulated capabilities, combining them according to different scenarios of various industry players, and launched an integrated SaaS service platform: from parts manufacturers (supply side) to auto parts distributors, alliances, chains (circulation side), and then to dealer groups, repair chains, used car dealers, mobility platforms, etc. (demand side), providing complete digital solutions based on the system.

On this basis, adding traffic to the supply side and goods to the traffic side, connecting upstream and downstream industries with "SaaS + supply chain" to gradually achieve efficient supply-demand matching and improve industry efficiency.

Since 2021, Baturu has developed mature cases for scenarios across all industry players. For example, on the supply side, for chassis, bodywork factories or integrators, it handles channel distribution and market penetration while matching them with high-quality, substantial downstream customers.

On the circulation side, it helps large-scale wholesalers, distributors, and cross-industry model alliances on the market to build private domain platforms.

On the demand side, Baturu's parts centralized procurement digital solution helps enterprises with parts procurement management needs reduce costs by over 10%.

Baturu's ability to make such changes and explorations is based on the capabilities accumulated from 9 years of supply chain practices, including data, systems, supply chain resources, operational capabilities, etc.

Achieved Full-Year Profitability in 2022

Continue to Prioritize Efficiency First, Profitability First in the Future

Since the pandemic, Baturu has "hunkered down" to accumulate and refine, with profound insights into the market and customers, as well as enhancements in organizational capabilities, achieving a complete transformation. Based on such dedicated exploration and accumulation, it has been "racing ahead" at full speed since last year. As an industrial internet platform enterprise, in 2022, Baturu achieved overall profitability, with revenue growing 24% compared to 2021 and per capita efficiency improving 50%.

In the future, Baturu's goals are clear: persist in building an open digital infrastructure platform, providing solutions to upstream and downstream industry players with SaaS + supply chain, helping them achieve long-term business success; internally, prioritize efficiency first and profitability first, creating an efficient organization and a profitable industrial internet business model.